Looking at Implications of Raising Taxes on the Wealthy; Details Emerge from White House Meeting; Nelson Mandela's Family Speaks Out; Top 10 Political Moments of 2012

Aired December 28, 2012 - 15:30 ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

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ALI VELSHI, CNN CHIEF BUSINESS CORRESPONDENT: From the CNN Money newsroom in New York, I'm Ali Velshi. This is "Your Money."

The fiscal cliff is a battle of ideological wills. Some Americans feel strongly that increasing taxes hurts the economy. Quite possible that it will.

But the central question is whether it will hurt all that much to raise income taxes a little bit on the highest earners in the country.

Well, to push the country to the edge of a recession over this is irresponsible. The increase will hardly affect the economy, but that's my opinion and my opinion should count as much as anyone else's.

The problem is that in Washington one person's opinion carries disproportionate weight and that person is Grover Norquist. He's the head of Americans for Tax Reform. They've got the pledge that mostly Republican members of Congress signed to say they won't increase taxes.

Now, understand this. The top marginal tax rate going from 35 percent to 39.6 percent is not a tax increase. It is a return to tax rates that would have taken place after the temporary Bush tax cuts expired and got extended.

So, the way I see it, that cut was designed to be temporary, but clearly Norquist disagrees with me.

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VELSHI: Let's say we let the bush tax cuts expire at the end of the year and then congress moved to increase tax rates. Would that count? Would that violate your pledge?

GROVER NORQUIST, AMERICANS FOR TAX REFORMS: That would clearly be -- look, you can't go to the American people and say, we raised taxes $500 billion and then we cut it $400 billion. Please only look at the cut, not the overall rate.

If you raise taxes a hundred billion dollars on the American people, they're going to notice it. It doesn't pass the laugh test. (END VIDEO CLIP)

VELSHI: Now, people say he's just one guy. Grover likes to say the pledge isn't to him. It's to politicians' constituents.

But the truth is Grover Norquist is not just a guy. He's a guy who heads a lobby group with very powerful resources, one that uses millions of dollars in funding to get candidates elected and get others defeated.

That is not democracy at work. That is lobbying money at work and pledges like this don't make sense in a dynamic economy.

We've got to give our elected officials the tools and the leeway to do their jobs properly and not hamstring them with promises that are made in a vacuum, promises that are made without context.

So, if members of Congress, Republicans, in particular, were able to free themselves from Norquist's shackles and take a real look at the merits versus the risks of raising taxes, they would see something interesting.

While raising taxes is never ideal, the net effect to the economy of increasing the tax burden only on that portion of one's income that is higher than a quarter of a million dollars, by 4.6 percentage points, would have a negligible effect. That's because the proportion of what you need to spend on in life doesn't always go up in proportion to your income.

Let me put that another way. The more you earn, the less you need to spend on things that actually make the economy move.

Now, this is not an argument in favor of raising taxes on the rich. It is an argument against those who say the cost of doing so is greater than the cost of going over the fiscal cliff.

I just as soon no one's taxes went up and, yes, the government does need to cut waste and spend your hard-earned tax dollars more efficiently.

Most Americans think the tax system is rigged in favor of the rich. We need real tax reform in the United States. That's not going to happen by Tuesday. Neither is an agreement on how to cut spending.

Washington has known this day would come for a year and a half, but everybody was too busy campaigning and politicking to do the hard work of figuring out what to raise and what to cut.

Now, we're down to the wire. We're backed into our corners. We're powered by ideology. It is the wrong thing to do at the wrong time.

I've covered business for a long time and I've learned there are very few absolutes that stand the test of time.

We in the CNN Money Newsroom will be on this fiscal cliff thing like white on rice. If anything happens, we'll be here. We'll also have special coverage Saturday 1:00 p.m. E.T.

For now, though, I'm out.

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DON LEMON, ANCHOR, "CNN NEWSROOM": As promised, we said as soon as we knew something, you would be the first to know.

And our Jessica Yellin getting some information on that meeting at the White House now going on over the fiscal cliff. What do you have, Jess?

JESSICA YELLIN, CNN CHIEF WHITE HOUSE CORRESPONDENT: Hey, Don.

So, a source familiar with the meeting says that the -- inside that Oval Office, the president is proposing something that Democrats do not consider a new proposal, but really a restatement of what he laid out here on Friday, which is a plan that would raise taxes on people who make $250,000 or more, but keep them where they are for everyone else; extend unemployment benefits for some 2 million Americans; and then take on some other issues which sound to be more in the weeds.

Here is an interesting point. The source says if the others in the room do not have a counterproposal that can pass the House and the Senate, then the president will ask them to allow for an up-or-down vote.

So, clearly, it's a question of sort of shifting responsibility and saying, listen, guys, if you're not going to agree to my deal, what do you think can pass? What can we do to get this done?

The headline here, Democrats insisting there's no new proposal. It's the same $250,000-threshold, and if Republicans can't agree to that, then what do they have and let's bring it to a vote.

LEMON: OK. Jess, keep your ear to the ground there. Let us know when's going on. We appreciate it from the White House lawn.

The meeting happening now. Let's hope that they can do something.

All right, we're going to move on now and talk about former South African President Nelson Mandela. He's at home in Johannesburg after more than two weeks in the hospital.

CNN's Nadia Bilchik has an exclusive interview with his two granddaughters and she's here to tell us about it.

So, tell us what the family members are saying about his condition now, Nadia.

NADIA BILCHIK, EDITORIAL PRODUCER: So, I spoke to them this morning and I said to them, we heard so much over the last few weeks, let's hear from you. How is your grandfather really doing? Here's what they had to say.

(BEGIN VIDEO CLIP) ZAZIWE MANAWAY, GRANDDAUGHTER OF NELSON MANDELA: He's sitting up and he was waving at the kids and he was smiling at the kids. He's very alert and he's very aware of what's going on. So, yeah, he's doing extremely well. He's doing very well.

ZAMASWAZI DIAMINI, GRANDDAUGHTER OF NELSON MANDELA: Once in a while he needs, you know, medical care and medical attention and, you know, we're very grateful because, you know, he's surrounded by the best medical team.

You know, he's very well taken care of and he's very comfortable and he's very happy.

(END VIDEO CLIP)

LEMON: The first thing I thought, I mean, you know, it's good news. They're very upbeat about it. They're beautiful.

BILCHIK: Aren't they beautiful women, inside and out? And they called me because they wanted to tell the world. They're so tired of the rumors. They say ...

LEMON: Social media.

BILCHIK: Social media. Every second day, he's died, or the latest rumor was he's gone home just to live out his last days. There is nothing more the hospital can do.

So, I wanted to share from them their frustration with these rumors.

LEMON: OK.

(BEGIN VIDEO CLIP)

MANAWAY: That is absolutely not true. Our grandfather is well and it's just -- it can be very, very hurtful for us to hear these messages out there in the social media that our grandfather is going to go home, he's going to go die and, you know, it's just -- it's insensitive and we just would really like to appeal to the social media and the media to just please be like just sensitive, you know, to our feelings, our grandfather's feelings, as well.

He is very alert. I mean, my grandfather still wakes up in the morning, reads the newspaper, so he's also aware of what is being said around him, about him.

And, so, we just really would like to appeal to everybody out there to stop saying these rumors. They're not true. Our grandfather is great and he's doing very well.

(END VIDEO CLIP)

LEMON: There you go.

BILCHIK: Don, let's hope on the 18th of July, in the year 2013, you and I are sitting here celebrating Nelson Rolihlahla Mandela's, otherwise known as Madiba's, 95th birthday.

LEMON: Can you imagine? I think we will.

BILCHIK: Let's hope.

LEMON: Fingers crossed.

Thank you, Nadia. We really appreciate that.

It is still -- it'll still be in the air, but a little closer to the ground. The Shuttle Atlantis soon to go on display above visitors at its permanent home in Florida. We're going to show you the plans, up next.

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LEMON: OK. Let's get you back now to the White House. And you see that is Washington, obviously, and you also see the New York Stock Exchange.

Before we tell you, we're just keeping an eye on the stock exchange because it's down now. You can see it's down now, what is that, 120 -- your monitor at home is a lot bigger than the one in the studio.

Down 130 points, so I'm not sure if they're related, but we're keeping an eye on it.

They're meeting at the White House. My colleague Jessica Yellin getting some new information on the air moments ago, saying a source who has information on this meeting now, in the White House, says the POTUS will lay out a plan for tax increases for $250,000 plus, people who make $250,000 plus and then he wants to extend unemployment.

Not a new proposal, Democrats are familiar with this proposal and they say it's not new. If they don't have a counterproposal, the people who he's meeting with, the ones who don't like this, the Republicans I would imagine that he's talking about, they can pass the House and the Senate, the POTUS will ask to allow for an up-or-down vote.

So, that's the latest. They're hashing it out now. As soon as we get more information, we will let you know and, also, you can see the market's down, not sure if it's related, but the market will close in just about 15 minutes and we'll have that for you.

OK, let's move on as we keep an eye on that, as well, homing pigeons. They have been called indispensable, heroic for what they contributed to the Allied effort in World War II.

One of those flying heroes, though, never completed its mission. That's where one of the war's most intriguing mysteries begins.

CNN's Nic Robertson has more now.

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NIC ROBERTSON, CNN SENIOR INTERNATIONAL CORRESPONDENT: The secret war-time coded message that seems tantalizingly close to being cracked.

COLIN HILL, PIGEON CURATOR, BLETCHLEY PARK: This one message has more people interested in the pigeons during the war than anything we've ever had before.

ROBERTSON: Found by pensioner David Martin, bricked up behind his fireplace, attached to the leg of a dead pigeon.

DAVID MARTIN, FOUND MESSAGE: All we've got here is the breastbone, which is the first piece that came down the chimney. Then had the pigeon's head. Then the last thing that came down was this one with the red capsule on.

ROBERTSON: A World War II homing pigeon, carrying a secret message, that didn't make it home.

IAIN STANDEN, CEO, BLETCHLEY PARK: We made our own codes and clearly they're still very good today.

ROBERTSON: A mystery wrapped in an enigma, shrouded by time.

JEREMY DAVIS, PIGEON FANCIER: The scientists really haven't quite worked it out, but they say some, you know, go by the sun, the magnetic fields, even (INAUDIBLE) their way back to the loft.

Come on then.

ROBERTSON: Jeremy Davis knows pigeons, raises them.

DAVIS: And, basically, you know, they're athletes of the sky. With the wind behind them, they can get up to, you know, 90-miles-an-hour in some cases. But they usually average about 50-miles-an-hour.

ROBERTSON: Not just fast, but far. In a day, flying 600, 700, even 800 miles.

But how the bird with the message went missing, anyone's guess.

DAVIS: Basically, it could have gone and rested on the chimney and then got blown down the chimney, you know. You know, it just sort of got a bit tired and slipped. Yeah. It's either that or someone, you know, shot it off.

ROBERTSON: At the heart of Britain's war-time code-breaking was Bletchley Park. Today, it's a museum.

STANDEN: Those sort of codes on a pigeon like that were probably from one of two sources, either from an agent working behind enemy lines inside occupied Europe.

ROBERTSON: Or from front-line forces. Even bomber crews carried pigeons.

Museum curator Colin Hill tells this story about one avian hero, Royal Blue. HILL: He was on a Halifax bomber, went down in Holland and he flew from Holland in about four hours back to England and they sent the plane out and picked the full crew up.

STEWART WARDROP, GENERAL MANAGER, ROYAL PIGEON RACING ASSOCIATION: There were a quarter of a million pigeons enlisted in the Second World War, all of them played a part in the war and they saved many lives in some heroic acts.

So, it's a story that should be told and it needs to be shouted.

ROBERTSON: They didn't just carry messages, but film, too. Utterly indispensable, a vital part of the Allied war machine.

HILL: All the D-Day landings for the first four days were brought back with the pigeons because Churchill had said no radio to be used.

ROBERTSON: Almost all messages were coded. This message, 27 blocks of five letters, may now be offering up some of its secrets.

Canadian researchers say it was sent by a soldier dropped behind enemy lines. A Sergeant Stott using a World War I codebook reporting on German tank movements.

WARDROP: The latest information that, yes, has to be checked, however, is we understand the fusilier that actually sent the message died in 1944.

ROBERTSON: And that has led to the realization the mystery message could have played a role in the war's most decisive battle, the D-Day landings.

The more they learned, the more exciting the puzzle becomes.

HILL: If it came from the D-Day landings, which it looks like it did, yeah, a lot of lives were lost there, so, yeah, it could have been a very important message.

Britain's code-cracking experts today caution the Canadians may yet lack the right codes.

STANDEN: It's very likely that that sort of message was sent using a one-time pad or a code book and, so, unless you can find the code book or the one-time pad, it's almost virtually impossible to break.

WARDROP: It's a message 70 years ago. It can't change anything. So that kind of aura of mystery, I think, it just is just a nice way to end the story.

ROBERTSON: Still a mystery, but for how much longer?

Nic Robertson, CNN, Bletchley Park, England.

(END VIDEOTAPE)

LEMON: All right, Nic.

The Space Shuttle Atlantis won't be flying anymore, but it's going to be the star attraction at a nearby museum. There it is, right there, Atlantis before it got to its home at the visitor's center in Florida.

All of this with no costs to taxpayers. The move was funded by a private company.

You can check it out yourself next time you are in Florida. The attraction will be opened to the public starting in July.

From an initial lackluster debate performance to the 47 percent comment, the top political gaffes and game-changers of 2012, next.

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LEMON: All eyes on Washington, D.C., specifically, the White House. Four top leaders, four top-ranking members in Congress meeting with the president right now.

We've gotten some details from our chief White House correspondent, Jessica Yellin, who said just moments ago, the president's in there meeting with them, Timothy Geithner, the treasury secretary, in there, as well.

The president has asked to raise taxes on those making $250,000 or more and, if the other side does not have a counterproposal, then he will ask for an up-or-down vote in the House and Senate.

So, there you go. As soon as they come out, they're going to step up to the microphones and you will get it right here on CNN. You'll be the first to know.

If you were putting together a list of the top political moments of 2012, the presidential election would be right at the very top, of course,

But there were compelling stories, inside and outside the campaign, that made indelible marks.

CANDY CROWLEY, CNN SENIOR POLITICAL CORRESPONDENT: Picking the top- ten moments of an election year is like finding your favorite grain of sand on the beach. There are an impossible number of possibilities.

There are the moments when catchphrases become boomerangs.

PRESIDENT BARACK OBAMA: If you've got a business, that -- you didn't build that.

MITT ROMNEY, 2012 REPUBLICAN PRESIDENTIAL NOMINEE: I like being able to fire people that provide services to me.

ERIC FEHRNSTROM, ROMNEY POLITICAL ADVISER: It's almost like an Etch- a-Sketch. You can shake it up and we start all over again.

CROWLEY: And a fair number of moments ranging from ridiculous to inexplicable.

CLINT EASTWOOD, ACTOR: I'm not going to shut up. It's my turn.

OBAMA: I think it's called "Romnesia."

ROMNEY: If I were to coin a term, it would be "Obamaloney."

CROWLEY: So many moments, so much nonsense.

But there were game-changers, too, moments that shook up the race or made history and made out top-ten list.

It was seen at the time as a proxy race for November. Wisconsin's Republican governor, Scott Walker, in a showdown with organized labor over budget cuts and collective bargaining power.

Turns out the end result was no bellwether for the presidential race. Walker won, the first governor in U.S. history to survive a recall election.

CROWLEY: And another nod to a Republican governor.

GOVERNOR CHRIS CHRISTIE (R), NEW JERSEY: I cannot thank the president enough for his personal concern and compassion for our state and for the people of our state.

CROWLEY: New Jersey Governor Chris Christie's full-on embrace of President Obama for helping Sandy-ravaged New Jersey came days before the election and had no noticeable effect on the presidential race.

But some Republicans think Christie didn't have to be that effusive. They will remember if his name pops up in 2016.

TODD AKIN, FORMER REPUBLICAN SENATE CANDIDATE: If it's a legitimate rape, the female body has ways to shut that whole thing down.

RICHARD MOURDOUCK, FORMER REPUBLICAN CONGRESSIONAL CANDIDATE: If life is a gift from God and I think even when life begins in that horrible situation of rape, that it is something that God intended to happen.

CROWLEY: Republican dreams to take control of the Senate in 2012 had dwindled throughout the year, but Akin and Mourdock pretty much shut that door in a couple of sentences.

Two words from Mitt Romney during a primary reverberated all the way through to November. The issue was his plan to prevent employers from hiring undocumented workers.

ROMNEY: People who have come here illegally won't be able to find work and over time those people would tend to leave the country or self-deport.

CROWLEY: The concept of self-deportation by undocumented workers was not by itself responsible for Romney's dismal showing among Hispanics, but it surely greased the skids.

Also in the category of moments where Romney wanted a mulligan there was this.

ROMNEY: There are 47 percent of the people who will vote for the president no matter what. All right, there are 47 percent who are with him, who are dependent upon government, who believe that they are victims.

CROWLEY: Romney called his remarks completely wrong. They also caused the deepest, self-inflicted wound of the election.

On the flip side ...

ROMNEY: He's going to be the next vice president of the United States.

CROWLEY: Romney's v.p. day may well have been the best moment. The selection of Congressman Paul Ryan excited conservatives in a way Romney himself had not.

How many moments are there in an hour and a half? The president lost all of them in the first debate.

The pictures tell the story of a man who phoned it in, panicking his supporters and providing an opening for Romney.

And, finally, the top three moments of the election best described as history-making politics.

A Supreme Court decision upholding the constitutionality of ObamaCare and, if that doesn't strike you as political, consider what would have happened on the campaign trail if the high court had struck down the president's signature, first-term achievement.

OBAMA: At a certain point, I have just concluded that for me personally, it is important for me to go ahead and affirm that I think same-sex couples should be able to get married.

CROWLEY: The first president to endorse same-sex marriage was a daily-double moment, good politics aimed at an activist wing of his party base and, most certainly, history.

And, finally, the number one political moment of the year is easy during elections.

WOLF BLITZER, CNN CORRESPONDENT: CNN projects that Barack Obama will be re-elected president of the United States.

OBAMA: We are greater than the sum of our individual ambitions and we remain more than a collection of red states and blue states. We are and forever will be the United States of America.

CROWLEY: Roll "Auld Lang Syne," cue the confetti and then say goodbye to 2012 and all its moments, historical and hysterical.

Candy Crowley, CNN, Washington.

(END VIDEOTAPE)

LEMON: Thanks, Candy.

One of the biggest political moments playing out right now at the White House. Let us go live there to the White House now and show you what is going on.

There it is. The president has just made an offer to the people who are meeting with him. They say it's not a new proposal, but basically, it says, if they can't -- if they don't have a counterproposal, then the president is asking for an up-or-down vote in the House and in the Senate.

Picking this up from here, no doubt, in "The Situation Room," Candy Crowley will be doing it.